ISAs and PEPs have changed to make investing simpler and more flexible
Questions and Answers
Q. Can you give me examples of how we can invest in ISAs from 6 April 2008?
A.
Example 1
Someone invests £1,200 in a cash ISA at the beginning of the tax year. In the same tax year they could also invest up to another £6,000 in ISAs (up to the total £7,200 ISA allowance limit). This could be up to £2,400 in the same cash ISA or up to £6,000 in a stocks and shares ISA with either the same or another provider.
Example 2
Someone sets up a monthly direct debit for £500 into a stocks and shares ISA with one provider and over the year they pay in £6,000 (12 x £500). In the same tax year they could invest up to another £1,200 in ISAs. This could be through the same stocks and shares ISA or a cash ISA with either the same or another provider.
Example 3
Someone has £9,000 saved in cash ISAs from previous tax years. They plan to invest their full ISA allowance of £7,200 for the 2008/2009 tax year in a stocks and shares ISA. In the same tax year they could also transfer some or all of the £9,000 held in cash ISAs to a stocks and shares ISA.
Example 4
Someone invests £3,600 in a cash ISA at the beginning of the tax year. They could then choose to transfer the whole £3,600 to a stocks and shares ISA during the same tax year. They could then still save up to another £3,600 into their ISAs - either into the same stocks and shares ISA, or a cash ISA, or a combination of both.
Q. What happened to PEPs?
A. All PEPs in existence on 5 April 2008 automatically became stocks and shares ISAs on 6 April. You’ll be able to invest in this relabelled PEP, which is now a stocks and shares ISA, as long as you haven’t invested in another stocks and shares ISA during the 2008/2009 tax year.
Q. What happened to existing ISAs?
A. Mini stocks and shares ISAs and the stocks and shares component of a Maxi ISA were reclassified as stocks and shares ISAs. Mini cash ISAs, Tessa-only ISAs (TOISAs) and the cash component of a maxi ISA all became cash ISAs.
Q. How much can I transfer from my cash ISA to a stocks and shares ISA?
A. You can transfer some or all of the money you’ve saved in previous tax years without affecting your annual ISA allowance of £7,200. You can also transfer money saved in the current tax year, but you must transfer all the money saved that tax year up to the date of transfer.
Q. Can I transfer the money I have invested in a stocks and shares ISA into a cash ISA?
A. No, the ISA rules are being changed to allow you to transfer money from a cash ISA into a stocks and shares ISA, but not the other way around.
Q. Can I still transfer my ISAs held with one provider to another provider?
A. Yes, you can transfer ISAs without affecting your annual ISA allowance. Ask the new provider to arrange the transfer. Don’t withdraw the money and reinvest it – that would count against your annual ISA investment allowance and would affect the tax benefits available to you.
Q. I've still got questions. Who can I speak to?
A. If you want further information there are a few options. You can speak to your Financial Adviser. Or HM Revenue and Customs have set up a helpline - you can call it on 0845 604 1701. You could also call us on 0845 845 2222. We’re open from 8am to 6pm from Monday to Friday. We'll be happy to help.
